“There’s been a mass exodus of big players from the market in these parts of California,” Ben Keys, a real estate and finance professor at the Wharton School of the University of Pennsylvania, told a conference Friday.
“We’ve seen enormous non-renewals recently,” he said.
On Wednesday, California’s insurance commissioner, Ricardo Lara, announced that homeowners in areas affected by and around the fires would be protected for a year against non-renewal and cancellation of coverage.
This type of measure protected more than a million contracts in 2024.
In 1968, the coastal state set up a public insurance scheme, called FAIR, for homeowners who could no longer find a private insurer.
This “band-aid” was supposed to be temporary while people moved from one insurance policy to another, but has now expanded well beyond its intended use, lamented Keys, pointing out that its exposure had risen from $50 billion in 2018 to more than $450 billion today.
To bring companies back on board, Commissioner Lara has also initiated a reform process authorizing them to increase premiums on condition that they do not apply any geographical exclusions.
There is no longer any question of “cherry-picking” to select the best contracts, said Susan Crawford, an expert on climate and geopolitics at the Carnegie Endowment for International Peace.
“The acceleration in ferocious weather events… should trigger awareness that actually things do need to change,” she said. “We need some measure of political adjustments in reaction to rapid climate change.”
In the meantime, Californians — and perhaps Americans nationwide — should prepare for an increase in premiums; 2025 has only just begun, and the previous year was marked by some destructive disasters.
According to modelling by the specialist website AccuWeather, hurricanes Milton and Helene caused $160-$180 billion and $225-$250 billion in damage respectively.
On Wednesday, it estimated the total cost of the Los Angeles fires so far at between $135 billion and $150 billion.
The State Department published a new national strategy on climate change Friday, stating that climate-related disasters like winter storms and hurricanes had caused $182.7 billion in economic losses in 2024 — twice as much as in 2023.
© 2025 AFP